FHA Credit Guidelines

Credit scores must meet certain guidelines for all FHA mortgages except for streamline refinances that do not require any credit check. Generally credit scores must be in the following range:

400-620+

Certain circumstances will allow FHA to be forgiving and may allow credit scores that are lower if certain compensating factors are meet such as large retirement savings, higher then expected income, or more of a down payment.

If your credit score falls within or below the 520 range you owe it to yourself to start rebuilding good credit click here to learn how.

Credit History

Non-Traditional Credit:

Non-Traditional Credit is acceptable if the borrower does not have any prior credit history or if that length of credit history is too short to qualify. We would need at least three letters from any repeated monthly obligation such as rent, utilities, store accounts, cell phone accounts, and/or any other acceptable sources. Make sure to let your FHA Loan Officer know about your current credit situation to avoid any mishaps in the processing of your mortgage.

Judgments:

Court ordered judgments must be paid completely, unless the borrower has been making regular and timely payments and the creditor is willing to subordinate that judgment to the new insured mortgage. The borrower must provide a satisfactory written explanation.

Collections:

Handled on a case by case basis.

Bankruptcy:

-Chapter 7 requires a minimum two-year lapse period since discharge date; minimum one-year lapse period may be acceptable if bankruptcy was caused by extenuating circumstances that are not likely to recur the reason can not be debt caused by uneducated choices. Only extenuating circumstances will be considered and only after one year has passed. In all cases the borrower must have re-established credit and must demonstrate the ability to manage financial affairs.

-Chapter 13 is permitted if a one-year payout period has elapsed and performance has been satisfactory. The borrower must receive court approval to enter into the mortgage transaction.

Foreclosures:

Require a minimum of three years since the completion of the action and the borrower must have re-established good credit.

Delinquency or Default on Federal Debt:

If the borrower is presently delinquent on any federal debt or is obligated on any type of federal lien, he or she is not eligible for an FHA loan until the delinquent account is brought current, paid, or otherwise satisfied, or a satisfactory repayment plan is made between the borrower and the federal agency owed and is verified in writing.